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Why I’m going to the Congo on Wednesday.

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Live well by doing good.

Four and half years ago we started The Crankset Group and 3to5 Clubs to help business owners get to their Ideal Lifestyle, and to fulfill my vision of focusing on solutions to poverty. On the latter, we’re taking a radically different approach.

Non-profits vs. Capitalism
500 million people (1 2/3 U.S’s) have come out of poverty in JUST 20 YEARS in China and India alone. And it wasn’t the result of non-profits or other traditional means. It was achieved through [ugly, evil, horrible, by some accounts] capitalism, which has been exponentially more effective in attacking poverty in those countries than any other methods.

In the last 100+ years of well-meaning non-profit intervention in Africa – a few trillion dollars and tens of thousands of incredibly dedicated lives later – the rosiest of studies says the long-term impact on economic growth is not “tranformative” and “peters out” (The Effects of Foreign Aid in Sub-Saharan Africa, Aug 4, 2010). Some research says Africa is actually worse off economically then it was 100 years ago.

Using Business to Effect Change
The Democratic Republic of the Congo is the second poorest country on earth . We’ve been asked by business leaders and the government to come get involved. I’m doing it by getting personally involved, long-term, with national as well as local business leaders and government there, and starting a company in the Congo with an investment where I will purposely take a minority position to native Congolese.

We intend to effect permanent change by rebuilding the economy with the revenues from the business, and by working to build and rebuild many businesses around that one by the velocity of the dollar (capitalism). This is when the same dollar moves through multiple businesses in a local area and creates wealth multiple times for many people. We’re looking forward to using it to kick start local economies in the DR Congo.

It’s Time to Give Local Capitalism a Try
Some people and some non-profits have a negative view of capitalism because of the high visibility of giant corporations making bad macro decisions for micro (local) problems – see my blog on The Problem of Big . But capitalism at the local level is a very positive, stabilizing, long-term solution, as demonstrated by the incredible successes in China and India.

One of the big issues in the DR Congo has been giant corporations coming in, pulling out resources and money for a few years or more, then leaving. Because there was no local or national ownership, the net effect was never sustainable. We intend to create local ownership, keep a significant portion of profits local, and see the Congo transformed one business/locality at a time.

I could have given this money to any number of charities that do incredible work to solve short-term problems (hunger, disaster, health, etc.). And we’ve been offered thousands of dollars by non-profits to fund the large potable water project and the clinic we’re putting in before we do any business. We’ve also been offered millions in loans by the U.S. government to accelerate the start up process exponentially.

But in both cases my Congolese friend and I believe these improvements should come from the profits (and in this case the initial investment) of the company. It will provide a “no strings attached” approach, but more importantly it will show people the direct benefit of having capitalism and our company working in their area.

Giving Money or Building a Business Are Both Risks
As with any investment, there are risks, and with this kind of investment, the risks are much higher than normal. However, this isn’t a typical investment in a company, but the decision to focus on capitalism instead of charities to build a different future for the DR Congo. If we were giving these funds to a charity, I would expect no return. If our company grows and prospers we will be able to give this money (in the form of starting other locally owned companies) many, many times over.

Intending to Succeed
My Congolese friend and I intend to change the Congo. He said, “I want you to see the Congo today because I want to stand with you on the edge of Kinshasa 10 years from now and say, “See what we have done!””.

If we succeed we’ll see a very different Congo down the road. If we don’t, we’ll call it practice and go back to the drawing board to see what else we can try. Either way, we will Live Well by Doing Good.

We intend to succeed.

Be the Best in YOUR World by Making the Rules

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What are you good at?

I went to Home Depot last week to return the toilet guts I had bought nine months earlier that had stopped working. Turns out they knew what they were selling didn’t work locally but that didn’t stop them. It’s really hard to be the best nationally and locally. As a local business owner, you’ve got an unfair advantage.

I was more frustrated with myself than with Home Depot because I’d replaced the guts to four different toilets in our house every 12-18 months for the last 15 years without thinking about the five year warranty. I talked to the manager and asked why the innards were failing so often and he replied, “The water is really hard in Highlands Ranch and makes the plastic parts brittle.”

I asked why, if they knew all this time that the parts don’t work in Highlands Ranch, that they were still selling them. He replied “The buying decisions are all made in our headquarters in Atlanta.” We then went back to the plumbing parts department and he asked the plumbing expert if he knew if they had anything that resisted the hard water problems here (the store is in Highlands Ranch), and his short answer was “No”.

Apparently it’s widely and long held knowledge among local Home Depot staff that the parts they sell don’t work in our town, but since the buying decisions are made in Atlanta, it doesn’t dawn on them to look for a local solution, or at least post a sign that says “these are great parts but not here.”

A locally owned store has an unfair advantage over big box stores. While the manager of the big box may live locally and care deeply, he or she can’t often customize their offering to meet the unique needs of a local community.

Big box stores win when you play by their rules, so don’t do that. What are you good at that they can’t begin to replicate? Walmart may have low prices but have you ever tried to find someone to help you find the right tool or ask about which bicycle to buy? If you offer great and knowledgeable service, it’s a rule they can’t play by – it would cost too much for their low price rule. They can’t play by your rule – you win.

What are you really good at that the big box stores can’t touch? While they do some things well, what are the things that they just can’t do? Low prices usually mean lower service. Centralized national buying usually means parts that are good for everyone and not great for your particular town. I know a lot of local owners who are killing it by simply refusing to play by the big box store’s rules.

He who makes the rules wins.

Make some rules they can’t touch. You don’t have to be the best in the world to compete with the big box stores. Being local puts you in the best position to be the best in YOUR world, and when somebody wants a toilet part, that’s the only world that matters.

UPDATE – June 30, 2011 – ELEVEN MONTHS LATER.

In July of last year, Home Depot gave me the guts to the toilet. Those guts failed this week – eleven months later. The kit has a five-year warranty.

I took the failed kit back to Home Depot, explained to the manager that I had been given this free by the previous manager, so I didn’t have a receipt. He wouldn’t replace the failed kit without a receipt and told me to contact the manufacturer.

Since I have to buy a new kit, I’ll be doing so from a locally owned plumbing supply store, and will go out of my way to avoid Home Depot in the coming years for all other purchases.

I’m pretty sure a local business owner would have had a different response. Don’t you?

I’m also pretty sure I’ll be telling this customer service story worldwide in my keynotes and workshops for years to come. It’s a great example of why you should buy locally.

Why We’re Leaving Our Giant Bank

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And why we didn’t do it earlier. UPDATED Jan 2013

Wells Fargo is likely the “great bank” among the big ones, with the highest integrity and the lowest tolerance for bad banking practices among the bigs. But if my experience is typical as I believe it is, that should scare us all.

In early 2009 Wells Fargo took away our business credit line without so much as a letter to tell us why – it just vanished from our online banking screen one night. They did this to every single small business account in America without regard to the viability of the business. The $25 billion in 2008 Federal bailouts to WF never trickled down from Wells to their clients. I personally know of many very healthy businesses that were destroyed by this single act, and tens of thousands were damaged for years after because of it.

IT’S ALL ABOUT THE BANK
When it happened, we showed our local Wells Fargo branch manager our perfect credit and they said, “Frankly, we took away everyone’s business lines with no regard for their credit. We just had to make our own balance sheets look better.” That honest Wells Fargo manager said their credit requirements had tightened to the point of being “ridiculous.” She’s no longer there.

Many business owners switched to using their personal credit lines and had their interest rates jacked up right AFTER using them, not before. We did this to see what would happen and sure enough, within a week our rate was jacked, too. All while Wells Fargo was receiving the lowest interest rates from the Feds in history and had lined their pockets with $25 billion in free bailout money that had no strings attached to it.

This is the great bank, the good one amongst all the bad ones. If this lack of integrity is how good one acts, what are the bad ones like?

OUTTA HERE
In 2010 after more incidences of bad customer service, we told our Branch Manager we were leaving and were looking for a small local bank that wouldn’t make macro-decisions that ignored their customers. We also told them we would wait until our revenue was significant enough to make Wells Fargo stand up and take notice.

UPDATE – JANUARY 2013
We set up our one international business with a local bank in early 2012, not Wells Fargo. But our main focus is Crankset Group, which grew 392% from 2008 to Dec 2012, which has been with Wells for six years. They requested a meeting in December to introduce us to four business bankers they now want us to work with, and told us we didn’t have to interact with the regular branch folks anymore. We’re special now that we’re big enough.

Our growth and the complex merchant account changover required is making it hard to invest time in changing banks. But we’re committed to doing it before the end of 2013. We are thinking of hiring a marching band when we do. And when we meet with Wells Fargo to close out, we hope they’ll learn from our experience, but based on their disregard for us as a client until we were “big”, we’re not holding our breath.

Do the small banks do better? Our experience with our other business is that they are much more better at paying attention and meeting our needs. And much less expensive.

2013 – MORE FEES – CHARGING FOR THE LOLLIPOP?
Pert of the 2013 update – we got a form letter from Wells Fargo yesterday, January 3, stating that they will now be charging their clients for cash deposits. They are now charging you to put cash deposits in their bank so they can make interest off of it. Mind-boggling, but not surprising.

In the same letter they outlined three other new fees, including charging their clients for transfers from Wells Fargo savings to Wells Fargo checking – $15 a pop to do that. My community bank will transfer to another unrelated bank anywhere in America for $7.50 and sometimes nothing. Watch closely – Wells is taking their cues from the airline industry. Next they’ll be charging to use their pen, and then for the lollipop.

GO LOCAL
Our lesson? Go local whenever possible. It’s not a panacea, but it can never be worse and more than likely a local bank, as with any local business owner, is more likely to pay attention because they live there, not in some skyscraper 1,000 miles away.

What’s been your experience with big banks/big business vs. small banks/businesses?